Correct pricing propels offers

List your house for sale at whatever inflated price you want, but it's probably not going to sell.

I can make this statement with some degree of confidence, based on the graph on page 2, supplied by the Greater Chattanooga Association of Realtors. As the graph reflects, the difference between the original list price of homes in the Greater Chattanooga area and the final sold price in January 2012 ran -12.1 percent. This amount of change is often referred to as the List to Sale Variance and it has been declining for several years.

In the height of the real estate boom of the last decade, sellers could expect to receive 97 percent of their list price (in 2005 for example). This is in sharp contrast to 2010 when the list to sale variance stood at 90.7 percent and 2011 at 88.5 percent of original list price. In real numbers, a home that originally listed for $100,000 would close at $88,500 on average.

Do not misinterpret this to mean that homes are being purchased at 11-12 percent off the current list price, but rather the original list price. Many homes have had subsequent price reductions between the original list and the final listed price that procured a buyer. How often have you driven by a home and seen a "reduced" or "new price" sign? These intermediate reductions got the home to the final price that attracted a buyer.

Today's consumer is increasingly savvy and understands "fair market value." For this reason, many buyers simply rule a house out until it gets closer to the correct price. At that point, the house becomes a serious consideration and then ultimately procures an offer.

Keep in mind that there may be factors that affect the desirability of a property to a prospective buyer that may not be immediately obvious. Things such as a small kitchen or bathrooms, road noise or a poor school zone can all affect what a buyer is willing to pay for a home. If you run into this feedback and cannot affect the issue (you cannot move the house), then move the price and do it sooner rather than later.

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